Ground beef drops 16 cents and officials call it a victory
FORT WORTH, TEXAS – American supermarkets are facing accusations of forgetting to lower beef prices following Washington’s campaign to increase imports and make ground beef more affordable.
President Trump’s administration expanded temporary import access for lean beef trimmings, expecting additional supply to help ease pressure on household grocery budgets. But an American Farm Bureau Federation price survey found that average prices for 80% lean ground beef fell only from $7.29 to $7.13 per pound over three weeks in September, according to RFD-TV.
At 30 of 41 supermarkets surveyed, prices were unchanged. Consumers responded by asking whether 16 cents was enough to qualify as a government affordability initiative.
The Mystery of the Missing Savings
For years, American consumers have been informed that high beef prices reflect transportation costs, limited cattle supplies, processing expenses and market conditions. These factors are real. Unfortunately, they are also remarkably flexible explanations.
When livestock prices rise, retail prices must rise. When transportation costs increase, retail prices must rise. When cattle supplies shrink, retail prices must rise. When costs decrease, consumers are informed that the situation is complicated.
A supermarket economist named Franklin Margin explained the phenomenon.
“Retail prices are subject to market gravity. Unfortunately, our prices have discovered how to defy gravity in only one direction.”
His findings have been enthusiastically welcomed by grocery executives and unanimously rejected by people purchasing hamburger.
The Hamburger Price Investigation
A congressional investigation attempted to trace the final retail price of ground beef from ranch to supermarket. The committee identified the rancher, feedlot operator, meat processor, wholesaler, transportation company and retailer. Each participant was asked to explain its contribution to the price.
The rancher discussed feed, breeding, veterinary care and land expenses. The processor discussed labor, facilities and food safety. The trucking company discussed fuel. The supermarket discussed maintaining competitive margins.
The congressional committee charged taxpayers $8 million to produce a report identifying inflation as a concern. Consumers asked whether the report could be exchanged for a pound of hamburger. The government refused.
Farm Action Beef Price Analysis: The Numbers Make Everyone Uncomfortable
Separate analysis by the farmer advocacy group Farm Action suggested that cattle producers experienced price declines substantially larger than the modest retail-price reductions observed in its comparison. That does not prove retailers pocketed every difference; farm and retail prices measure different products and stages of a complicated supply chain.
Nevertheless, the contrast raises a reasonable question about how quickly wholesale price changes reach consumers.
A survey of 600 cattle ranchers asked what happens when cattle prices fall. Eighty-seven percent answered, “We earn less.” Thirteen percent answered, “The banker calls sooner.”
When asked what happens when supermarket beef prices fall, respondents requested photographic evidence.
Washington Announces the Sixteen-Cent Victory
Under a federal grocery-affordability celebration, officials proposed demonstrating the purchasing power of a 16-cent price reduction. A family buying five pounds of ground beef could save 80 cents at the surveyed average price.
That might purchase a small portion of a candy bar. It would not purchase a retirement plan.
A government spokesperson proposed a new public-information campaign: “Every Little Bit Helps, Especially If You Don’t Need Much Help.” The slogan was rejected after focus groups demanded cheaper hamburger instead.
Ranchers Prefer Markets That Work
The legitimate policy challenge involves improving supply without punishing domestic producers or pretending retail prices change instantly. Cattle herds require years to rebuild. Processing and distribution have costs. International competition matters, but so does a healthy domestic livestock industry.
Ranchers and consumers both benefit from transparent, competitive markets. The problem begins when politicians declare affordability achieved before shoppers experience it.
A Texas cattleman offered a practical suggestion.
“Next time Washington announces cheaper beef, have somebody check the grocery store first.”
Officials considered the proposal. Then they announced a task force.
The supermarket raised the price of paper towels.
The Evidence File
Mathematical Calculations
A drop from $7.29 to $7.13 is 2.2%. The Farm Bureau survey showed ground beef changing by less than the tip jar at a lunch counter. Divide the $8 million congressional report by 80 cents of family savings and the committee has produced the equivalent of ten million families’ worth of Tuesday coupon.
Statistical Absurdity
Thirty of 41 stores held their prices flat. That is 73% of grocery stores doing absolutely nothing, a level of consistency that would make a granite quarry jealous. DTN reported the Farm Bureau’s call to end the beef quota to the same effect.
The Obvious Question Nobody Asks
If the cattle price fell and the retail price didn’t, who is holding the difference? Nobody on the panel volunteered. The paper towels, reportedly, are doing great.
Sources and Further Reading
Read the RFD-TV report on the Farm Bureau price survey, Farm Bureau’s analysis and DTN Progressive Farmer. Consumer price data is at the Bureau of Labor Statistics.
Source: American Farm Bureau retail price survey reported October 16 and Farm Action’s October 14 analysis. Surveys used different samples and price series.
Humorous Observations
- A 16-cent drop. That’s not a price cut. That’s what a tooth fairy leaves when the economy is bad.
- Retail prices “defy gravity in only one direction.” That’s not economics. That’s every child on a playground slide in reverse.
- The congressional committee spent $8 million to find out that inflation is a concern. I could’ve told them for the price of a coffee, and I wouldn’t have needed a clipboard.
- “Every little bit helps, especially if you don’t need much help.” That’s the slogan of every insurance company, and no one’s ever rejected it.
- The supermarket raised the price of paper towels. That’s not retail. That’s a fine for crying over the hamburger.
Last Updated on January 29, 2024 by Alan Nafzger